JOHANNESBURG (miningweekly.com) – Diversified miner Exxaro Resources saw a 31% drop in headline earnings to R2,51-billion for the year ended December, 31, 2009, compared with headline earnings of R3,6-billion the year before.

The group’s earnings were impacted on by a R1,44-billion impairment at its KZN Sands operation.

However, its revenues grew by 8,4% to R15-billion, compared with R13,8-billion the year before.

“The coal business reported lower net operating profit as an increase in revenue, mainly due to higher export and local power station sales volumes, was more than offset by lower international coal prices and above inflationary increases in the cost of electricity, rail tariffs and labour costs, and realised and unrealised foreign currency losses,” commented CEO Sipho Nkosi.

Power station coal output at the Eskom-tied mines was down 9%, owing to an inrush of water at the Matla 2 mine.

However, Exxaro’s commercial mines increased production by 8% to more than 20-million tons a year to meet increased demand from Eskom.

Coking coal production declined by 21% as a result of difficult geological conditions at Tshikondeni mine, while semi-soft coking coal production at the Grootegeluk mine declined significantly, as a result of lower demand from the steel and related industries.

Steam coal production increased by 19% to 6,6-million tons.

The group noted that domestic coal sales were down 16%, as a result of lower demand, while export volumes increased by 44% to 4,7-million tons.

Meanwhile, lead and zinc production at Exxaro’s Rosh Pinah mine saw a 14% drop in lead concentrate exports, in line with expectations.

Zinc output at the Zincor refinery of 87 000 t was slightly higher than that of 2008, but was adversely affected by downtime on the acid plant, as well as the disruption caused by the explosion in September 2009.

Going forward, the group expected global demand for coal to rise this year, in line with higher local power station coal demand. Domestic demand for steam and metallurgical coal would likely be firmer, but would remain subdued in 2010.

Exxaro expected its base-metals businesses to remain under pressure this year, as a global zinc oversupply could result in downward pressure on zinc prices in the second half of the year.

Local base-metals demand would, however, likely remain stable.

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